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Abracadabra – The magic internet money $SPELL

Exclusive Research

  • DeFi 2.0 offers loans on interest-bearing collateral and more.
  • Abracadabra.money generates $2.2m in fees per week and is valued at just 10x sales.
  • The amount of fees generated depends on users’ ongoing favour and competition is fierce.
  • The next step in financial innovation is coming to crypto and it is magical.

DeFi 2.0 is a financial wonderland

Did your bank ever tell you about a self repaying loan? Probably not.

DeFi 2.0 follows the Web3 mantra that successful companies shift their focus from maximum value extraction to value provision. Web3 knows that ultimately the companies that empower their users and help them make money are the companies that attract the most users and thrive.

After lending and borrowing crypto on Aave et al. and liquidity farming and staking on SushiSwap and its peers, the last couple of months saw the emergence of a new breed of financial services. Labelled DeFi 2.0 and spearheaded by Abracadabra.money, Olympus DAO and Trader Joe, among others, DeFi 2.0 leads intrepid investors into a financial wonderland.

Abracadabra.money allows users to deposit interest-bearing collateral to take out loans of its stablecoin $MIM - short for magic internet money. Read that again. The collateral bears interest! Voila, self repaying loans.

Abracadabra.money and $SPELL

DeFi makes financial services fun and colourful. From Uniswap’s unicorns to SushiSwap’s food anime to Pancakeswap’s amusing, emoji fueled website. Abracadabra.money takes this game to a whole new level. Upon visiting the website, full of pixelated items straight from a C64 game, the central claim reads: “ABRACADABRA.MONEY IS A SPELL BOOK - THAT ALLOWS USERS TO PRODUCE MAGIC INTERNET MONEY.”

It sounds like a joke but is an accurate description of the functionality. Users can deposit collateral like yvYFI, yvUSDT, yvUSDC and xSUSHI to get $MIM in return. Their own $SPELL token powers the platform.

The service generates an average of $2.2m per week in fees, with $4.5bn in TVL. At current levels, the platform will render $120m in yearly revenue. $SPELL market cap is $1bn, giving it a price-to-sales ratio of under ten on 19 November 2021.

Even trad-fi fintech startups trade at 35x or higher. It’s hard not to be bullish on $SPELL. $SPELL’s price could be three times that and still be considered fair value.

The winds of change and trade

Total value locked on the platform was trending slightly downwards in the last two weeks. Under closer investigation, this can only be seen in USD. Denominated in ETH, we can even see a slight increase in funding.

Fees generated in the future depend on investor confidence in the platform and interest in its services, especially vis-a-vis its competitors. It took about one and a half years to get from DeFi 1.0 to 2.0. Further innovation and the birth of DeFi 3.0 are sure to happen.

Will Abracadabra.money be able to compete?

$MIM is relatively stable, but it’s a world apart from USDT and other classic stablecoins, representing a risk for holders.

Conclusion

At current valuations, $SPELL seems like a steal. Using Abracadabra.money to take out $MIM with a self-repaying loan is undoubtedly intriguing. 1.2m ETH of locked value agree.

$MIM can, in turn, be used for liquidity farming which yields tokens that can be used as collateral, and so on.

Do your own research, as always, but don’t miss out on this financial wonderland if you are comfortable using DeFi.

Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.

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